Recently, I noticed that most retail traders don’t understand who really controls the market. Everyone talks about whales, but no one mentions market makers — and those are essentially the same whales, just with algorithms and contracts with exchanges.

Let’s break it down. First, you need to understand the difference between liquidity providers and market makers. A liquidity provider is a broad term for anyone adding liquidity to the market: regular users in Uniswap pools, large investors, venture funds. They are mostly passive — they deposit their assets into pools and earn fees.

A market maker is a completely different animal. These are professionals (usually companies or funds) who actively trade, place and remove orders, earning on the spread. They don’t just provide liquidity — they create it through continuous placement of matching buy and sell orders.

Now, the most interesting part. Market makers on major exchanges almost always sign NDAs — non-disclosure agreements. Why? Because they gain access to confidential information: trading volumes, large orders, liquidity flows, even exchange APIs. Imagine knowing when a new token is launching on an exchange and what the initial liquidity will be. Exactly — market makers often know this in advance.

How do they manipulate the market? I’ve seen it countless times. The first method is spoofing. The market maker places a large buy order, creating the illusion of demand, the price rises, then the order is canceled, and the market maker sells at the peak. Simple and effective.

Second — pump and dump. Coordinated price pumping through mass purchases, retail traders see green and FOMO in, the market maker liquidates their position, and everyone ends up with losses.

Third — stop hunt. Market makers see clusters of stop-loss orders at certain levels and intentionally push the price there to gather liquidity. For example, they see a lot of stops on sell orders at $40,000 for BTC, push the price to that level, collect liquidity, then reverse the market.

Fourth — wash trades. The market maker buys and sells assets simultaneously, creating the appearance of activity. This attracts other traders and allows the market maker to take advantageous positions before real moves happen.

Fifth — spread manipulation. Narrowing the spread when they want to push the price up, widening it when they want to bring it down.

Who’s behind all this? Specialized firms with huge capital and advanced algorithms. Jump Trading, Citadel Securities, Jane Street — these names are known to anyone following the markets. Alameda Research used to be among them until FTX collapsed. Often, market makers are funded by exchanges or funds interested in liquidity.

The paradox is that market makers are needed by exchanges. Without them, the market would be illiquid with terrible spreads. When new trading pairs are launched, it’s the market makers who keep the price within reasonable bounds. But at the same time, they create manipulations.

Here’s a typical scenario for listing a new token: the exchange negotiates with a market maker, who receives tokens at a fixed price, then at the open of trading, places large orders to narrow the spread, earns fees and the difference between buy and sell.

The takeaway? Market makers are whales in the shadows. They appear as market stabilizers, but in reality, they manipulate prices for their own benefit. They have informational and technical advantages over retail traders, and they use this advantage without mercy. Ordinary traders often become victims because they simply don’t see the full picture. Market makers operate from the shadows, and that’s their main weapon.